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Cost Cutting Strategies at the Bottom of the Pyramid

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  1. Cost Cutting Strategies at the Bottom of the Pyramid The SMS Story, Missed Calls, and others Lorraine Carlos Salazar salazar@lirne.net LIRNEasia Media Workshop: Singapore 28 February 2007 fieldwork by funded by IDRC

  2. Agenda • Research methodology & key findings: • Harsha de Silva • The SMS story, missed calls, and others • Lorraine Carlos Salazar • The next billion customers • Ayesha Zainudeen

  3. General ‘cost cutting’ strategies due to high cost perceptions… • SMS • Second-hand mobile handsets • Missed calls • Prepaid subscription

  4. It’s true: Philippines is the SMS capital of the world Lack of meaningful information? Of local-language capabilities on handsets?

  5. Who types the SMS? Lower literacy levels in Pakistan & India

  6. Key barrier to SMS use among non-users

  7. 75% at BOP use SMS on a daily basis Filipino SMS use aided by language advantage, and driven by high cost of use?

  8. Urban vs. rural SMS use Anomaly in rural Sri Lanka…Perhaps to do with prices, or the outdated def’n of urban and rural

  9. Why so much SMS in Philippines? cost-cutting through SMS, missed calls, and more…

  10. General ‘cost cutting’ strategies due to high cost perceptions… • SMS • Second-hand mobile handsets • Missed calls • Prepaid subscription

  11. High expected per minute costs

  12. …especially on mobile

  13. High expected initial cost of getting connected

  14. ‘Cost cutting’ via use of second hand mobile handsets at half the price! More Filipinos use second hand phones

  15. ‘Cost cutting’ via missed calls High miss calls in the Philippines, less in India where call prices are low

  16. Missed calls more popular among male mobile owners in South Asia

  17. ‘Cost cutting’ via prepaid connections

  18. Prepaid helps to control expenditure

  19. Expenditure control evidenced by infrequent top-ups in PK, IN, LK & TH

  20. In sum… • High price expectations lead to adaptive cost-cutting measures – which in turn creates a way of life in the Philippines and in the other countries... • SMS is now a way of life in the Philippines • BUT, this is not a bad thing: as it is driving affordable access at the bottom of the pyramid

  21. Thank you for your attention